In parts of Minnesota, median wages are not sufficient to meet the basic needs of a typical family. Furthermore, in all regions of the state, there are likely a significant number of workers with wages that are not adequate to meet basic needs. These conclusions are based on information from the “Minnesota Cost of Living Study Annual Report 2016” prepared by the Minnesota Department of Employment and Economic Development (DEED).
The DEED report examines the “basic needs cost of living” for a “typical Minnesota family.” Specifically, the report examines living costs in seven basic need areas: food, housing, healthcare, transportation, child care, taxes, and other necessities. According to the report,
The Cost of Living represents neither a poverty living nor a middle-class living but rather a simple living that meets basic needs for health and safety. Therefore, the following costs are excluded, even though they may be common expenses: savings, vacations, entertainment, eating out, tobacco, and alcohol.
Based on data from the Census Bureau’s American Community Survey and the U.S. Bureau of Labor Statistics, the DEED report defines a “typical Minnesota family” as a pair of partnered workers, one working full-time and the other working part-time (working a combined total of 60 hours per week or 3,120 hours per year), and one child. The report then determines the basic needs cost of living for this typical family statewide and within each of Minnesota’s thirteen economic development regions (EDRs). The map and table at the bottom of this article identify the counties in each of these regions.
The DEED report compares the hourly wage needed to maintain basic needs for this typical family to the median hourly wage paid to workers across all occupations. The table below shows this comparison for the entire state and for each EDR.
On a statewide basis, the median hourly wage needed to support the typical Minnesota family as defined above is $17.57, while the median wage for all occupations is $18.65. In other words, the median wage pays six percent more than what is necessary to meet the basic needs for the typical family. After meeting their basic needs, the typical family making the median hourly wage would have about six percent of their income left to cover all expenses outside of basic needs, such as retirement savings, vacations, entertainment, eating out, and consumption of items not considered to be basic needs.
By definition, half of the occupations in Minnesota pay above the hourly median wage and half pay below it. Thus, over half of the occupations in Minnesota pay more than what is needed for the typical family to meet basic needs. However, given that the basic need cost of living equals 94 percent of the median hourly wage and given that there is significant variation in wages above and below the median, it is a safe bet that a significant percentage of all jobs in Minnesota pay less than what is needed for the typical family to meet basic needs.
In ten of the state’s thirteen EDRs, the median wage exceeds the wage needed to meet basic needs for the typical family. The region with the highest median wage relative to basic needs is the Northwest Region (EDR 1), where the median hourly wage is fourteen percent higher than the hourly wage needed to meet the typical family’s basic needs. In the state’s most populated EDR—the Twin Cities Metro area (EDR 11)—the median wage is six percent above the basic need wage, the same as the statewide average. Nearly 55 percent of the state’s population and 62 percent of the state’s employment is in the Twin Cities Metro area.
In three EDRs, the hourly median wage is less than or equal to the wage necessary to meet the basic needs of the typical family. In Central Minnesota (EDR 7W), the median hourly wage is identical to the typical family’s basic needs wage; thus, in this region, half of the occupations pay above the basic needs wage and half pay below it. The median hourly wage is seven percent below what is needed to meet the basic needs of the typical family in the North Central Region (EDR 5) and eleven percent below in the East Central Region (EDR 7E). In these two regions, fewer than half of all occupations pay what is needed to meet the typical family’s basic needs.
It is important to note that DEED’s definition of a typical family’s “basic needs” is fairly Spartan, excluding items like retirement savings and the occasional meal out. As noted above, a significant portion of all jobs in the state—in some areas, over half—do not pay enough to meet even these basic needs. The next article in this series will compare the hourly wage needed to meet the basic needs of a typical family to the median wage offer for job vacancies and the state’s minimum wage.
Minnesota Economic Development Regions